In a candid Q&A session with reporters at a hospital, Shadow Chancellor Rachel Reeves addressed the controversy surrounding the freezing of tax thresholds. Facing tough questioning from Sky News’ Beth Rigby, Reeves sought to clarify the Labour Party’s position and its commitment to its 2019 manifesto.
Rigby pressed Reeves on her previous statements, where she had suggested that freezing tax thresholds would breach the party’s manifesto pledge. Reeves acknowledged that while the move does come at a cost for working people, it does not technically violate the letter of the manifesto. “If you read the manifesto, we’re very clear. We say the rates of income tax, national insurance and VAT,” Reeves explained. “But if you’re asking, does this have a cost for working people? I acknowledge it does. As I said that in the budget last year. I’m not going to pretend otherwise today.”
The debate centres around the nuances of the manifesto’s wording. While the document states that Labour “will not increase taxes on working people,” it also specifies that the party will not raise the basic, higher, or additional rates of income tax. Reeves argued that the freezing of thresholds, while increasing the tax burden on individuals, does not constitute a direct increase in the tax rates themselves.
However, the Institute for Fiscal Studies (IFS) has suggested that the manifesto promise has been broken. Rigby pressed Reeves on this point, but the Shadow Chancellor remained steadfast in her defence. “I’m not going to get into semantics,” Reeves said. “I’m keeping every single promise on tax that I made in our manifesto.”
The episode highlights the delicate balance Reeves must strike between upholding the party’s electoral commitments and addressing the economic realities faced by the country. As the cost-of-living crisis continues to squeeze household budgets, the Labour leadership must carefully navigate the political landscape and ensure their policies align with the promises made to the electorate.
